All Forum Posts by: Erin Spradlin

Hey there- we help clients get into investment properties in Denver and Colorado Springs, and would say the main thing is to be very clear on what your most important metric is (cash on cash, cash flow, cap rate, etc.) because we often see people look at multiple metrics, which can make it very hard to make a decision. So, know the metric you care about most.

You should get in the habit (if you aren't already) of running deals on a spreadsheet and looking for deals and or errors in your number. BiggerPockets also has a calculator to help you figure these out but I like doing my own so that I know exactly how I'm running my numbers. 

Redfin is actually an excellent source for info on the house - mortgage numbers, taxes, insurance, etc. Don't forget about utilities (if you plan on covering any.) Rentometer will also give you a great numbers on predicted rents (if you plan on renting.) 

Hope that helps and good luck! 

Hey there- 1. Welcome to BP! and 2.) couple questions for you... Have you done the research to find out if its reasonable to purchase a 4-6 bedroom property in Ontario for $200-300K? Sometimes there is the dream and then there's the reality, so just making sure that's possible. Also, have you looked up what rents go for? Would you rent to one family or multiple people in the same home? You can find out rents at rent-o-meter.com, although I'm not sure they service Canada. Additionally, have you considered closing costs, repairs, maintenance, taxes and utilities? All good things to consider when you're running the numbers. I know because I run investment properties for clients in Denver and Colorado Springs, and these are items to consider. Likewise, what metric is most important (cap rate, cash on cash, cash flow, etc.?)

As to getting a primary residence and then renting it out, this is mortgage fraud and in the US (at least) you can get in a lot of trouble for this. The reason lenders require you to put 5% down on a primary is because you are more willing to fight for it and it'll be a more important asset to you if times get tough. They require 20% for investments because it's a risker loan for them and they need to know what their risk level is across their portfolio. I would advise lying about it because if you get caught, there can be serious consequences that will impact your ability to invest long term. Better to go with a smaller/cheaper place and put the full 20% down.

Hey Bryan-

That's a great question, and one I just read about in Dave Greene's excellent Long-Distance Real Estate Investing book. On a high level, here are the basics: 

• it's a section in the tax code
• allows you to avoid paying capital gains taxes on specific investments
• Move profits from one property into another
• Like kind properties same in nature or character
• 45 days to id new properties to close on
• 180 days to close on an identified property
• Avoid taking possession of the money

Talk to your lender (and your CPA) about this as they can advise you on the rules for a 1031 exchange. I've also included links for more info on 1031s. Good luck! 

What is a 1031 Exchange?

FAQs about 1031 Exchanges

I was surprised that the Mayor was taken off guard, and that the city restricted it when Airbnb has been proven to revitalize the neighborhoods it is in (guests stay 2.1x longer than in a hotel and spend 2.1x the money.) I'd say Detroit could use that life.

We help clients find Airbnb properties in Denver and up and down the front range, and this is always a concern of ours. (Denver limits it to primary residences, but some of the other cities don't have laws in place.) I feel like it's smart to pay attention to city council, etc. if you want to prevent this from happening.

@Jayr Ruiz - If you want to do it (with your landlord's permission), you could run some numbers, present them to him and offer to cut him in on the extra money. If you do not, I would rent a property where the landlord is indifferent and/or have a financial plan for what will happen if you get caught.. specifically, could you absorb that cost? Could you find someone to sublease it? What are the financial consequences to getting out of your lease?

 My husband and I advise investor clients on Airbnb in Denver, CO and there are a few resources you can use to pull numbers. First, you can use Airbnb itself. By looking at properties in cities you are interested in, you can see demand and what people paid (look at your competition's calendar and see how often they were booked or what they were charging.) You can also using AirDNA, which is a reports' service that is a little pricey but culminates data for cities that have 100+ listings. 

@Lance Peterson - Hey Lance, no problem. A medium-term rental is a furnished rental of 30+ days. That's not a formal definition, but it is what I meant by that. The advantage to the medium-term rental is that you are probably not going to encounter laws/HOA rules that limit them (HOA can be tricky, so double check), they are less work than an STR, the money is still better than a traditional rental and the demand is relatively high if you are close to a college or a hospital or something with appeal that needs employees.

Regarding the feel you got from talking to the HOA contact, I would check the docs and read minutes before making any decision. HOAs can be fickle and you never know when something can change and you have to transition out of an STR investment (this happened to us), so just keep an eye on it. Good luck!

@Jenessa NeSmith - Hey there. I think this is a great idea. I do airbnb investments and real estate for clients in Denver and they are always asking about short term rentals and airbnb management costs.  As @Tyler Work posted, 20% seems to be the average in Denver, but I'm seeing higher rates for other cities. The main issue (in my opinion) is offering a service that you make money off of but that's also worth it to the investor or your end client. As @James Carlson said, starting relationships with real estate agents could be useful in getting your name out and also getting help running the numbers. 

@Peter Milcourton - I am a real estate agent in Denver that specializes in Airbnb properties for our clients. We usually tell them they should expect around 20% for STR rentals if they go with someone local (which we also recommend.) Looks like the comps are all over the place on this thread (and some quite a bit higher), but I've heard of national brands going as low as 10%, but then the services get cut back. Because STRs are so much more work than a long term rental, paying extra is worth it- but I don't think going about 30% is... It has to be a win win for both the property manager and the investor hiring them.

@Lance Peterson - that's great that the condo and HOA are pro STR. Is it written into the docs though? Those things can change quickly. Also, does the city have any laws yet about STR? If not, they will come soon enough. That said, I'm a huge advocate of STRs and the money they can bring in versus what a long or even medium term rental can, but it is more work and it can go away. I think if you can run the numbers and know you'll be lucrative if and when the time comes to flip to a medium or long-term rental than doing STRs for as long as you can makes a ton of sense.